Friday, May 21, 2010

Another reason to cheer Maxime!

As I said a few days ago, Maxime gave a speech on taxes in Winnipeg at the Frontier Centre. He makes a lot of sense, as he usually does.  Less government spending and more private wealth creation are excellent ideas.

As long as we have taxes however, we should make sure that they cause the least possible distortion in our economy.

Some taxes are really dumb. The capital tax for example. Capital is the result of investments; it serves to increase our productive capacity; in a word, to become richer. We need more capital accumulation, not less. A tax on capital is self-defeating, in that it slows down capital accumulation, investment and economic growth. Fortunately, it has been abolished at the federal level. And our government provided an incentive in the 2007 budget for provinces that still have one to phase it out.

What about the corporate income tax? One proposal we hear regularly from proponents of bigger government is that corporations don’t pay enough taxes. If only they did, we could fund more government programs, and we could reduce the tax burden on individual taxpayers.

However appealing this may be, it has no basis in logic.

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